"Today's action shows that there's still an expectation that there will be a tech rebound in the second part of the year," said Wendy Abramowitz, investment strategist at Argus Research in New York. "In recent days, you've seen a couple of different semiconductor companies warn, H-P
HWP
has made cautious statements, Gateway's come out to say that they're going to beat other PC makers' prices, indicating that earnings will continue to suffer, and you've had some of the computer distributors suggest that their business is weak. We've seen so much of a hit in tech stocks, and now it's time for some bargain-fishing."

A report by the Semiconductor Industry Association released late Wednesday said that what's likely to be the chip sector's only losing year ever, chip industry revenue is expected to increase 20.5 percent in 2002, and 25 percent in 2003, outpacing the industry's 17 percent average yearly growth rate over 40 years.

The SIA said it expects revenue in the Americas to decrease 22 percent in 2001 and then grow 20 percent in 2002, 25 percent in 2003 and 2 percent in 2004. Sales in Europe will decline 6 percent in 2001, and also increase 20 percent in 2002. Sales in the Asia-Pacific region will decline 16 percent this year, but will increase 23 percent in 2002 and 27 percent in 2003, SIA predicts.

"Despite the sales decline brought on by the excess inventory this year, the semiconductor market is still projected to grow from $149 billion in 1999 to $283 billion by 2004, a compound annual growth rate of almost 14 percent," said Kirk Pond, Fairchild Semiconductor president, CEO and chairman of the board.

National Semiconductor
NSM, -2.16%
shares rose $3.07, or 11 percent, to $31.04 after the company reported breakeven results on a per-share basis, beating analyst expectations. The company, however, is now targeting a first-quarter loss of 30 cents to 35 cents per share. Analysts currently expect a loss of 1 cent per share, according to the consensus estimate of analysts surveyed by First Call/Thomson Financial.

Broadcom
BRCM
shares rose $4.67, or 13 percent, to $40.24, after the communications chip company warned that its second-quarter revenue will be as low as $207 million, or 32 to 35 percent lower than first-quarter revenue of $318 million. Analysts had been expecting sales of $254.7 million in the quarter.

"In response to the numerous acquisitions made in the last two years and the current more challenging economic climate, we are taking steps to streamline our business," CEO and President Henry Nicholas said in a statement.

Communications chip companies, however, were among the strongest gainers in the entire tech group, as Applied Micro Circuits
AMCC
rose $1.93, or 10 percent, to $21 on positive analyst comments. C.E. Unterberg, Towbin said that companies in the sector are having fewer problems with near-term order cancellations and order push-outs. Applied Micro could see double-digit sequential growth for the next six to eight quarters. Shares of competitors gained, as PMC-Sierra
PMCS
surged $4.65, or 14 percent, to $38.68, while Vitesse Semiconductor
VTSS
added $1.51, or 6 percent, to $26.70.

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